It is a few thousand dollars worth of steel installed on a small bridge in a sleepy Colorado town.

But this summer’s rebuilding of the South Park St. Bridge in Morrison, Co., 20 minutes west of Denver, is also an absurd tale of what happens when two massive integrated economies erect protectionist walls.

Everything was going according to plan when a contractor installed new steel beams on the aging bridge, which spans a wild creek that cuts through the centre of town.

Then, after the bridge reopened, a city engineer spotted an invoice showing the beams were fabricated by Atlas Tube in Harrow, Ont.; American-made steel, but rolled in Canada by a U.S. company. And that automatically disqualifies the entire $144,000 (U.S.) project from federal funding under the Buy America Act.

The town (population: 430) is now faced with the expensive choice of ripping up the bridge and removing the beams at a cost of $30,000, or losing tens of thousands of dollars of U.S. government funding. “It’s pretty much a real big mess,” acknowledged Kara Zabilansky, Morrison’s town administrator.

Morrison’s nightmare on the South Park St. Bridge has now grown into an international incident. Marcy Grossman, Canada’s consul general in Denver, complained in an op-ed piece in the Denver Post recently that American taxpayers are the real losers in this saga.

“While the intent of Buy America may sound reasonable, they do not provide the best results for the public taxpayers,” she wrote. “Local content requirements increase costs because there is less competition from which to source products and more money has to be spent to administer and review such requirements.”

And the situation risks getting worse as Buy America content rules proliferate across federal government and U.S. state contracts, she warned.

“Buy America restrictions in the United States have increased pressure from Canadian industry for Canada to implement its own procurement restrictions, on a reciprocal basis,” Ms. Grossman pointed out.

Indeed, the Canadian Manufacturers and Exporters has been lobbying Ottawa to do just that on major infrastructure projects, such as the $5-billion (Canadian) replacement of Montreal’s Champlain Bridge.

“The kind of situation happening in Colorado should be a wake-up call for the Canadian government to start using their own purchasing power to provide a level-playing field for Canadian steel manufacturers,” lamented Jayson Myers, the CME’s chief executive officer.

Mr. Myers said it’s “shocking” that the federal government imposes no restrictions on U.S. steel used in bridges and other large infrastructure projects in this country when Canadian manufacturers are being treated so unfairly by Washington.

At least two Ontario municipalities – Kingston and Halton Hills – passed motions recently calling on governments in Canada to fight back against the spread of Buy America rules. And Mr. Myers said many similar resolutions are expected to follow suit in the coming months.

Back in Morrison, Ms. Zabilansky is dismayed that her Buy America headache is now provoking a cross-border backlash and threats of retaliation.

“There should be some other type of clause in the Buy America Act to allow Canada and America to work together,” she said. “It’s a little different if we’re shipping stuff overseas.”

Ms. Zabilansky still can’t believe that the fiasco all stems from an inadvertent $770 (U.S.) overshoot. That’s how much the Canadian value of the steel exceeded the $2,500 foreign content exemption in U.S. highway projects.

“They determined that if some of the steel was fabricated in a foreign country, then they consider all of the steel foreign,” she said.